Helionetics’ Gamble on a Return to Profitability : Earnings: Holding company lost $21.6 million for 1994. Financier is betting on profits in 1995.

IRVINE — If Beverly Hills financier Bernard B. Katz invests recklessly, as his critics contend, he says it is only because of his commitment to complex technologies that require years of development.

But no technology guarantees a profit without a well-structured organization behind it. Katz was reminded of that principle Wednesday when his holding company, Irvine-based Helionetics Inc., reported a $21.6-million loss for 1994, far more than the $4-million loss it had expected to post after failing to produce an advanced computer on time.

Last fall, the American Stock Exchange halted trading of the company’s stock. Now, with Helionetics shares valued at less than $1, Katz and his wife have mortgaged all their assets, valued at $10 million, to bet that the company will make a big profit this year.

“We’re prepared to have to sell our home to make this work, because we’re going to,” says Katz, who is 64. “If we win, it will be a major benefit for the world.

“And if we lose, I’ll be the oldest box boy in Safeway.”

Founded in 1980, Helionetics began as a defense contractor. Its stock traded above $30 a share in 1983, in part on the strength of Katz’s connections to prominent figures like former Treasury Secretary William Simon, nuclear scientist Edward Teller and David C. Jones, former chairman of the Joint Chiefs of Staff, all of whom Katz recruited to the company’s board.

But the company filed for bankruptcy in 1986 after failing to pay debts. After emerging from Chapter 11 protection three years later, Helionetics now describes itself as a holding company that buys other firms with promising civilian technologies.

Today Helionetics has a dozen employees, while its five main subsidiaries, scattered across the United States, together employ 200.

Helionetics’ most successful division, KSW Inc., earned $1.5 million on revenue of $36 million last year. KSW provides mechanical services for commercial buildings.

Other, more troubled divisions include Tri-Lite, headed by Katz’s brother, Alvin, which makes lighting fixtures and electrical energy management equipment; and Sentinel Systems Inc., which is developing a computer for office networks which has an extremely low probability of failure.

Altogether, Helionetics’ losses equaled 88 cents per share last year, compared with profit of $316,000, or no cents per share, in 1993. Revenue was $66.9 million last year, compared with $21.6 million the year before, an increase driven mainly by its acquisition of KSW in November, 1993.

The few Wall Street analysts who still bother to follow the company at all are split into camps: those who think Katz is a dreamer, and those who are fed up with his promises. Some hold both views.

“If you’re buying Helionetics, the odds are somewhat better than buying a lottery ticket, but not a whole lot better,” said Carl R. Frederick of Frederick Research Corp. in Plainfield, N.J.

Philadelphia analyst Peter Miller, who advised all holders to sell their shares several years ago, said it will take a huge gain by a Helionetics unit if investors are ever to recover their money.

Such skepticism, says Katz, will only make the payoff sweeter. A medical laser the company is working on “will benefit mankind when we’re ready with it,” he said, and earn back much of the company’s onetime value.

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Helionetics Posts Loss

Helionetics lost $21.6 million in 1994, despite a 185% revenue increase. Revenue and net income, in millions:

Revenue (1994): $66.9

Net Income (1994): $-21.6

Source: Bloomberg Business News; Researched by JANICE L. JONES / Los Angeles Times